US embassy cable - 05VILNIUS636

C O N F I D E N T I A L SECTION 01 OF 02 VILNIUS 000636 
 
SIPDIS 
 
STATE FOR EUR/NB 
 
E.O. 12958: DECL: 06/16/2015 
TAGS: PGOV, PREL, LH, HT3 
SUBJECT: ECONOMY MINISTER RESIGNS OVER ETHICS VIOLATIONS; 
GOVERNMENT COALITION INTACT 
 
REF: VILNIUS 504 AND PREVIOUS 
 
Classified By: Political-Economic Officer Nancy Cohen 
for reasons 1.4 ( b,d). 
 
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Summary 
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1. (C) Lithuania's Minister of Economy Viktor Uspaskich 
tendered his resignation June 16, following the announcement 
of a Government Ethics Commission finding that he had 
violated the laws regarding conflicts of interest.  Uspaskich 
will reportedly relinquish his position in Government and his 
seat in Parliament, but appears intent on maintaining his 
leadership of the Labor Party.  For now, it appears that 
Labor will remain in the ruling coalition, and speculation 
focuses instead on whom among its ranks will assume 
Uspaskich's place as Minister.  End Summary. 
 
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Commission Confirms Violations, Investigations 
Continue 
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2. (U) The Public Service Ethics Commission, by a 4-1 vote, 
determined on June 16 that Uspaskich had violated national 
laws regulating conflicts of interest on the part of public 
officials.  The Commission found that Uspaskich had conducted 
private business during meetings with Moscow municipal 
officials while on an official trip in March.  A second 
finding on another less publicized charge states that 
Uspaskich's efforts as Economy Minister to transfer 
management of Lithuania's regional information centers to the 
Lithuanian Business Employer's Confederation (of which he is 
a former president) created a conflict of interest. 
Uspaskich is also under investigation by three parliamentary 
commissions for alleged unethical or otherwise illegal acts 
while in public office (reftel). 
 
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Uspaskich Resigns 
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3. (U) After the Ethics Commission ruling, Uspaskich 
reportedly called Prime Minister Brazauskas -- in Brussels 
for the EU summit -- to tender his resignation.  Brazauskas 
told reporters he would accept the resignation immediately 
upon returning to Vilnius.  Despite resigning, Uspaskich has 
indicated he disagrees with the Commission's finding and will 
appeal the decision in court. 
 
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Business as Usual 
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4. (U) One day after Uspaskich's resignation, the corridors 
of the Seimas are quiet and its business normal, according to 
a senior Liberal Party advisor.  Labor Party press attache 
Orijana Jakimauskiene told us June 17 that Uspaskich plans to 
remain head of the Party and that it will remain in the 
Government (despite earlier threats by Party Deputy Viktoras 
Muntianas that Labor would pull out of the ruling coalition 
if Uspaskich resigned).  Media speculation is focusing on the 
early list of possibles to replace Uspaskich as Minister of 
Economy, with MP Jonas Lionginas, a former long-time Finance 
Ministry official and current chair of the Budget and Finance 
Committee, a strong contender.   (Jakimauskiene denied that 
Lionginas is the frontrunner.) 
 
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Comment 
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5. (C) Political parties in Lithuania tend to emphasize 
personalities rather than ideologies or programs.  The Labor 
Party is no different.  Only eight months ago, it won more 
votes than any other party in the parliamentary elections, 
and opinion polls earlier this month showed that it remains 
the most popular party in Lithuania.   But it now faces the 
challenge of demonstrating that it can play a leading role in 
political life without its charismatic leader in office. 
Uspaskich's resignation at this point was the best option for 
him to retain political influence.  His ethical lapses (which 
appeared only to deepen this week with allegations that his 
college degree is fake) would have made it impossible to 
survive as Minister against the onslaught of criticism in the 
press and parliament.  His tight grip on the Labor Party -- 
based on his autocratic control and substantial financial 
investment in its operations -- should allow him to continue 
his considerable influence on the government. 
 
6.  (C) Many observers believe the scandals surrounding 
Uspaskich were born of internal coalition jockeying for 
control of the billions of dollars of EU funds headed for 
Lithuania.  Uspaskich had openly trumpeted his intention to 
use EU funds to reward his followers throughout the country. 
His departure from government will calm the waters for a 
short time, but there is no doubt he will continue to wield 
his considerable influence as Labor Party chief in internal 
government deliberations to benefit his party.  Consequently, 
internal squabbling is likely to continue within the 
coalition.  But it will unlikely be fatal in the near term -- 
there continues to be no realistic alternative to the current 
unwieldy arrangement. 
Mull